Daily Times

LONDON: British employers expect to raise pay only minimally over the next 12 months despite hiring more staff, a survey showed, suggesting the Bank of England is unlikely to come under much pressure to raise interest rates from their record low.

The Chartered Institute of Personnel and Development said employers predicted their pay increases would average 1 percent despite more of them expecting to increase staff levels than in its previous survey three months ago. “Predictions of pay growth increasing alongside strong employment growth is the dog that hasn’t barked for some time now,” said Gerwyn Davies, CIPD’s senior labor market analyst. While private-sector employers expect to raise pay by an average 2 percent, the median pay rise was dragged down by public-sector employers and charities which plan to offer pay rises of 1 percent and 1.4 percent respectively. The BoE is watching pay closely as it gauges whether to raise rates. It had expected wages to start rising more quickly as employment picked up, but this has failed to materialize despite a record-high number of people in work. Pay increases of 1 percent would lag further behind inflation which is likely to rise to around 3 percent later this year, tightening the squeeze on household budgets.

The CIPD said the weak outlook for pay was partly due to increases in migration from the European Union and the number of people looking for work over the past year. Respondents also cited uncertainty over Brexit, a higher minimum wage and costs related to the introduction of automatic pension enrolment as weighing on their pay decisions.